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Mr.Yu is buying 100 shares of Selender stock which is trading at 100$ per share. Simultaneously he buys a put on 100 Selender shares with
- Mr.Yu is buying 100 shares of Selender stock which is trading at 100$ per share. Simultaneously he buys a put on 100 Selender shares with strike 90 which has a premium of 2 $ per share and sells a call on 100 shares with strike 105, which has a premium of 3$. He net receives 1$ per share, for a total received of 100$.
a. What are the best and worst case profits/losses and at what stock prices do they occur?
b. What is the break-even stock price?
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Financial Management Core Concepts
Authors: Raymond M Brooks
2nd edition
132671034, 978-0132671033
